In its first quarter earnings results, Challenger has announced a 1 per cent rise in group assets under management (AUM) to $128 billion.
Total life sales decreased 14 per cent to $2.4 billion over the quarter, which incorporates the impact of a $619 million group lifetime annuity policy win in 1Q24.
In July 2023, Challenger was selected as Aware Super’s partner to provide a de-risking solution for its defined benefit fund that included a group lifetime annuity.
“The win highlighted the depth of Challenger’s capability and strength of our investment and longevity risk solutions,” managing director Nick Hamilton said at the time.
Excluding this, total life sales increased 10 per cent, driven by retail lifetime and Japanese (MS Primary) annuity sales growth and strong Challenger Index Plus sales.
Namely, retail lifetime annuity sales increased 26 per cent to $275 million and Japanese annuity sales were up 74 per cent to $244 million over the quarter.
However, the group said its retail fixed term annuity sales decreased 22 per cent to $564 million as Challenger maintained its “disciplined approach to pricing shorter duration business”.
Moreover, Challenger said its life business remained strongly capitalised with a PCA ratio 1.61 times the minimum regulatory requirement, following the payment of the final 2024 dividend.
Looking at its funds management business, the group attributed the AUM increase to funds under management (FUM) growth and positive investment market movements.
Namely, funds management FUM was $119 billion at the end of September, an increase of $1.3 billion or 1 per cent for the quarter.
Breaking this down, Fidante’s FUM was $101 billion, also a 1 per cent increase over the period.
“FUM growth for the quarter included positive investment market movements of $3.4 billion, partially offset by net outflows of $1.9 billion and client distributions of $500 million. Net outflows were primarily driven by redemptions of fixed-income mandates,” the group said in an ASX listing on Wednesday.
Meanwhile, Challenger Investment Management (CIM) FUM was $18 billion and increased by $233 million or 1 per cent for the quarter, primarily driven by net flows of $330 million from third-party clients.
Hamilton said this growth comes on the back of continued business momentum and progress on strategic initiatives
“Challenger continues to execute a range of strategic initiatives that will strengthen and broaden the business,” he said.
“Our strategic investment to re-platform the customer registry and technology for the annuity business is progressing to schedule. Once launched, the benefit from making our retirement products easy to access will be essential for our growth strategy.”
According to the managing director, Challenger remains “on track” to launch this function this financial year.
Challenger also reaffirmed its FY24–25 normalised net profit after tax guidance of between $440 million and $480 million.
Thye fact they significantly dropped their term annuity rates wouldn’t have helped. If they want more business then they need to offer more to clients. get those interest rates up over 5% will be a good start!
I like Challenger – they are pro-adviser and provide tremendous support (including technical and tools).